VARIOUS: Shares in Japan and South Korea drop over weak U.S. economy data

Tokyo's Nikkei average falls 2.2 percent as the yen surges against the dollar, while Seoul shares post its biggest one-day fall in almost a month. Both Japan and Seoul shares fell on Monday (September 10), with the Nikkei average closing at a three-week low and South Korea's KOSPI average posting its biggest one-day fall since Aug. 17. Nikkei's average fell 2.2 percent, led by slides for exporters such as Sony Corp., following a jump in the yen against the dollar and a sharp decline on Wall Street. A sharper-than-expected 0.3 percent contraction in Japan's economy in the second quarter, which was announced earlier Monday, added to the negative sentiment. Investors sold exporters after the dollar fell 0.5 percent from late U.S. trade to around 112.75 yen, sliding back towards a 14-month low of 111.60 yen, threatening to cut into profits made by Japanese companies abroad. Analysts say the rising yen is a concern for the stock market, adding investors are waiting to see at which point the market will hit the second bottom, following the recent low marked on Aug. 17. Earlier in the day, the government announced that Japan's economy contracted more than expected in the second quarter, reinforcing views that the Bank of Japan is unlikely to raise interest rates next week amid a global credit squeeze and market fall-out. Meanwhile, Seoul shares fell 2.6 percent to Friday's unexpectedly weak U.S. jobs data which raised concerns about the outlook for South Korea's second-biggest overseas market. Firms reliant on booming global trade such as POSCO Co Ltd also dropped as the mood worsened further on data out on Monday showing Japan's economy contracted more than expected in the second quarter. The benchmark Korea Composite Stock Price Index (KOSPI) dropped to 1835.87, after earlier falling as much as 3.9 percent. The retreat served as a stark reminder that last month's global market volatility was likely to continue, and cut short a 15.9 percent rebound in the main KOSPI as of last week. "The consumer spending holding two thirds of American GDP is likely getting worse additionally. These factors might bring worldwide depression. In that point of view, it will give a negative impact on the domestic stock market in the short-term," said Oh Seung-hoon, senior analyst at Daishin Securities. Shares fell even as the South Korean won weakened -- traditionally a positive for exporters -- with 719 shares falling and only 93 stocks higher.

ITN Source | September 10, 2007

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